The price of bitcoin continued its rally to inch close to the $3,000 mark last week. One of the reasons for that, according to Kirill Tatarinov, CEO of cyber security company Citrix Systems, is that companies are increasingly buying and storing bitcoin to pay for potential ransomware attacks in the future.
"We've seen people pay up after ransomware attacks. We've seen people who are proactively bulking up on Bitcoin anticipating those attacks. This is happening,” Tatarinov stated at The Deal's Corporate Governance conference in New York.
Another key bitcoin price driver has been what Bank of America researcher have called the “largest central bank buying on record” throughout the first half of 2017. Central banks around the world have bought a record of $ 1.5 trillion assets year-to-date. By purchasing assets (mainly fixed income securities such as bonds), central banks are keeping bond yields low, which allows government and companies to borrow cheaply. This, in turn, should spur growth. For investors, that means that they are receiving less yield on fixed income securities and, therefore, switch into riskier asset classes such as stocks. In other words, the recent strong performance in the stock market has been (partly) driven by central bank asset buying. That means that the stock market, which is already long overdue a correction, might soon hit its “Icarus moment” and correct sooner than later.
The way central bank asset buying has pushed up the price of bitcoin is two-fold. Firstly, investors are looking to diversify away from the overheated stock market and, secondly, investors are looking for higher returns than they can get in the currently low-yielding fixed income market.
Bitcoin, however, was not the only cryptocurrency that inched to new highs. The price of Ethereum’s ether rallied aggressively from $240 to above $400 in the last seven days and there was a point last week where the daily trading volume of ether surpassed that of bitcoin.
This week’s review is compiled from contributions by Alex Lielacher, Christoph Bergmann, Evan Sixtin, Jamie Holmes, Joseph Young, Michael Scott, Nuno Menezes.
An increasing number of central banks and governments are working on digitizing their national currencies. China and Russia are investigating the potential of Ethereum as the base protocol for a digital Yuan and Ruble respectively.
Currently, the Royal Chinese Mint, the subordinate unit of China Banknote Printing and Minting, is testing Ethereum and its ERC 20 token standard to digitize the renminbi (RMB) or the Chinese yuan. As ConsenSys’ head of global business development Andrew Keys revealed in his blog post, the Royal Chinese Mint is at the forefront of research and exploration into digital money.
Russia is also looking into Ethereum and its potential in the finance sector. Although technical specifications and details of the Russian central bank’s national digital currency project remains undisclosed, in 2016, the Bank of Russia announced the development of an Ethereum-based interbank blockchain prototype called Masterchain. Some of the largest commercial banks in Russia participated in the pilot test, and the Bank of Russia’s Deputy Governor recently expressed her optimism toward cryptocurrency.
The blockchain job market is seeing spectacular gains. That is according to a report by the business networking site LinkedIn.
These findings on the part of LinkedIn that were requested by the Financial Times showed that there were more than 1,000 blockchain related advertisements recently on the site, double the number during that same period in 2016. The data also noted that the number of blockchain ads is expanding at more than 40 percent each quarter.
SinglePoint and First Bitcoin Capital (FBC) signed a Joint Venture agreement to develop and distribute a proprietary payments solution which will allow large-scale, risk-free use of credit and debit cards within the Cannabis industry.
Although the buying and selling of cannabis for medical and recreational use have been legalized by State governments in several US states, payments are mostly still restricted to cash. US federal law, which states that ‘marijuana’ is illegal to manufacture, distribute, dispense, or possess, prohibits banks and credit unions from taking these proceeds and thereby prevents cannabis dispensaries from accepting payments through credit or debit cards issued by banks. Due to federal law, almost everyone in the Cannabis industry has a banking problem, cannot get loans, and customers must pay in cash.
SinglePoint and FBC aim to solve this problem by offering a custom payment solution that routes credit and debit card payments through bitcoin, using blockchain technology to eliminate banks from the process.
On May 30, LG, one of the largest electronics company in South Korea behind Samsung, officially announced its partnership with R3CEV as a part of a larger vision to target the South Korean fintech and finance industries with distributed ledger technology.
Over the past few years, many leading financial institutions and banks in the world have joined R3CEV, including South Korea’s KEB Hana Bank and Shinhan Bank. By market cap and nationwide survey on customer satisfaction and market penetration, Shinhan is the largest and most influential bank in the country, along with KEB Hana Bank.
LG is the first electronics and information technology conglomerate in South Korea to join the R3 Consortium and focus on developing blockchain technology-based financial applications.
Connecticut-based companies, GAW Miners and ZenMiner, have been ordered by the U.S. District Court for the District of Connecticut to pay $10 million each as fines for their fraudulent activities. Both GAW Miners and ZenMiner operated as apparent bitcoin cloud mining schemes.
On June 2 2017, the Connecticut District Court issued its final decision on the case. The ruling stated: “The judgment followed the court's May 29, 2017 order finding that the SEC established liability as to both defendants and adequately supported its requests for injunctive relief, disgorgement, and civil penalties.” The judge ruled that each company would have to pay a $10 million fine as well as a $1 million civil penalty.
The European Union (EU) has announced the creation of an international consortium that seeks to diminish the use of cryptocurrencies and the dark web by criminals. As evidenced in the recent WannaCry attack, criminals use the pseudo-anonymity provided by bitcoin to their advantage. This project aims to find ways to stop the use of cryptocurrencies as a means to evade the law while still respecting the right to privacy of non-criminal users.
The consortium is composed of fifteen members from seven European countries and is funded by the European Union. The consortium is named TITANIUM, which stands for Tools for the Investigation of Transactions in Underground Markets. The €5 million research project is slated to operate for three years and aims to develop workable scientific solutions towards the challenges of curtailing and investigating criminal activities such as terrorism, fraud, money laundering, and extortion, connected with the use of digital currencies and the dark web.
On June 6, AMD shares went up more than seven percent after the company revealed that its sales volume were skyrocketing mainly because of the direct influence of Digital Currencies, such as Litecoin. The stock was the top performer in the S&P 500 on the day. It seems that the recent price surge is directly connected to digital currency 'miners' who use AMD graphics cards to mine cryptocurrency.
AMD has long been the elected graphics cards to mine for altcoins, and this is having a significant impact on the demand for this type of hardware. AMD has been one of the market's top performers stocks in last year with its shares going up nearly 170 percent in the last 12 months.